On January 6, 2006, Prime Minister Phan Van Khai signed a law to raise the minimum wage at foreign firms in Vietnam.  The new minimum wage policy came into effect on February 1, 2006.  Under this law, the minimum wage is now set at $55 a month in Hanoi and Ho Chi Minh City, $50 a month in mid-sized Vietnamese cities, and $45 a month in the other areas of Vietnam.  This is a 41% increase from the previous minimum wage.

This significant change comes amidst waves of worker strikes in Hoh Chi Minh and other cities.  Many of the strikes have occurred at foreign companies.  With this new pressure from workers, the government has decided to raise the minimum wage after five years with no increase.  Although, Vietnam has strong socialist labor laws, the government does not strongly monitor working conditions at private companies.  As a result, many workers have become frustrated with low salaries and have also complained about poor working conditions at foreign firms. 

The Vietnamese government hopes that this new minimum wage increase will help appease workers at foreign firms in Vietnam.  But, Vietnam competes with China for foreign companies who want to utilize cheap labor.  Therefore, the government recognizes that the minimum wage cannot be too high if it still wants to compete with China.  The Vietnamese government is trying to balance the labor disputes and the needs of its workers with the demands of foreign investors and companies that employ these laborers.